August 7, 2019 / 2:29 AM / 4 months ago

Australia shares inch higher as trade tensions ease

Aug 7 (Reuters) - Australian shares saw meagre gains on Wednesday as investors tentatively sampled risk assets after China’s central bank helped stabilise the yuan, easing fears that its trade war with the United States might run into currency markets.

The S&P/ASX 200 index was higher by 0.1%, or 7.9 points, at 6,486 by 0210 GMT. It has fallen nearly 5% since last Thursday when U.S. President Trump threatened further tariffs on Chinese goods, leading China to allow the yuan to sharply deflate against the greenback.

Safe-haven gold stocks accounted for most of the gains on the main index, having climbed as much as 4% on the back of robust metal prices which continued to rise on the uncertainty surrounding U.S.-China trade relations.

Commonwealth Bank of Australia, the country’s largest lender, weighed down the benchmark, weakening as much as 2.9% to an over two-month trough after disappointing annual results.

CBA posted its first back-to-back annual profit decline in more than a decade and dashed investor hopes for a special dividend, flagging further pain to margins from low interest rates and swelling costs.

Fellow “big four” banks ANZ and Westpac gained as much as 0.8% and 1.5%, respectively.

Insurer Suncorp Group was set for its best session in nearly a year after it announced a A$506 million ($341.8 million) capital-return and share-consolidation plan.

Big miners such as BHP Group and Rio Tinto gave up as much as 1.1% and 1.3%. Resource exports, primarily iron ore, are Australia’s single-biggest earner, and China its top buyer.

“Strong economic growth in China is the primary reason why Australia has not had a recession in 27 years. However, this economic miracle may be coming to an end,” said Kim Do, strategic media advisor at IBISWorld Pty Ltd.

In New Zealand, the benchmark S&P/NZX 50 index was 0.1% higher at 10,602 by 0204 GMT.

The country’s central bank cut its interest rate by 50 basis points to 1.00%, in line with global policy easing bias.

Dairy-products maker Fonterra Co-operative Group said it intends to reduce its stake in China’s Beingmate Baby & Child Food Co, as it was unable to find a buyer for its entire holding.

$1 = 1.4806 Australian dollars Reporting by Devika Syamnath in Bengaluru; Editing by Stephen Coates

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